Resource Commodities

If the precious metals resume their upward trend in the new year, companies with advancedstage projects like Almaden Minerals, should provide substantial leverage on rising prices. In the interim, drilling on Almaden’s flagship Ixtaca deposit, part of its 100%-owned Tuligtic project in Puebla State, Mexico, has continued to turn in impressive intersections from the edge of the proposed pit at Ixtaca.

The highlight hole from the most recent batch of assays came from a new vein zone on the periphery of the conceptual pit. Hole 476 cut 15.8 meters of 4.31 g/t gold and 98.0 g/t silver, including 4.3 meters of 12.36 g/t gold and 287.8 g/t silver. It also returned a second interval grading 1.92 g/t gold and 34.5 g/t silver over 22.0 meters.

The holes drilled on the periphery of the pit demonstrate the potential for the company to find additional mineralization, both in and around Ixtaca’s proposed pit, as well as elsewhere on the larger Tuligtic property area.

Even if the current drilling program doesn’t add another ounce of gold or silver to Ixtaca, the deposit is already massive, containing 4.24 million gold equivalent ounces (2.0 million ounces of gold and 114.9 million ounces of silver) in all categories.

And, according to a revised preliminary economic assessment released around this time last year, the project has an after-tax NPV (discounted at 5%) of $166 million and an after-tax IRR of 30%. Importantly, by incorporating savings from the purchase of the Rock Creek Mill and focusing on higher-grade ore sooner in the mine plan, the capital costs have been reduced to only about $100 million.

That’s a financeable figure, providing Almaden with the realistic option of developing the project itself.

Simply put, this project is imminently mineable at current metals prices, making the company a potentially strong lever on rising prices. It’s a buy.